Labour was treated to a 45-minute lecture on the moral limits of markets by Harvard University professor Michael Sandel in one of the more extraordinary and cerebral addresses to a Labour conference by a visiting foreign speaker.

The author of Justice, who was asked by party leader Ed Miliband to speak to the conference, said: "If someone is willing to pay for sex or buy a kidney from a consenting adult, the only question standard economics asks is 'how much?' Each party decides for himself or herself on what value on the things being exchanged. This non-judgmental stance towards values lies at the heart of market reasoning and explains much of its appeal."

But he said that a reluctance to engage in moral argument, together with the embracing of markets, had exacted a heavy price: "It has drained our public discourse of moral and civic energy, and it has contributed to the managerial, technocratic politics that has afflicted many societies. A debate about the moral limits of markets would enable us to decide about where markets do and not belong. It would invigorate our politics by welcoming competing notions of the good life into the public square."

He told the Manchester delegates that politicians tended to shrink from moral discourse because people disagreed about hard ethical questions, even if it was limited to the value of small shops or the value of health.

He said: "I do not think it is a coincidence that a time of market triumphalism has coincided when public discourse has been largely empty of public and spiritual substance. Commercialism and unfettered market thinking undermines commonality since the more everything is bought the fewer occasions people from different social classes encounter one another.

He concluded: "Democracy does not require perfect equality. But it does require that citizens share a common life. What matters is that people of different social backgrounds, different walks of life, encounter one another, bump up against one another, in the course of everyday life. Because this is how we come to negotiate and abide our differences, and this is how we come to care to for the common good.

"And so in the end the question of markets is really not an economic question. It's a question of how we want to live together. Do we want a society where everything is up for sale? Or are there certain moral and civil goods that markets do not honour and markets cannot buy."